What is the role of a broker in real estate

In order to establish a bond of trust with your real estate broker at all stages of the transaction, it is important to know what is his role.

Once a broker has completed his basic training and obtained his licence, he is required to maintain his knowledge and skills up to date. The OACIQ also oversees his practice by developing mandatory forms designed to standardize real estate transactions.

A real estate broker is a professional trained to be an intermediary between a buyer and a seller during a real estate transaction. Here are some things to think about when a broker is involved.

A guide

A real estate broker can guide you through the process of buying a home. For example, a broker can help you find home and write up documents like a promise to purchase.

You can sign what is called a “brokerage contract to purchase” with your real estate broker. This contract says what type of home you want, the desired price and the amount of money you will pay the broker if you buy.

If you decide to sign a brokerage contract to purchase, you must follow some rules. For example, you can’t negotiate buying a home yourself.

Real estate broker responsibilities

Real estate brokers must respect ethics rules. For example, they must tell you about anything they know that could affect the property. So, if they learn that there are problems with the foundation or the roof, they must tell you.

Even if you aren’t represented by a real estate broker, you can benefit from the expertise of the seller’s broker. The seller’s real estate broker must treat you fairly. He or she must advise and inform you in an objective manner.

Real estate brokers must also ensure that the information they give the public is accurate. For example, they must ensure that property descriptions are accurate (square footage, year of construction, number of parking spaces, etc.).

Protections for the public

In Quebec, the real estate brokerage profession is regulated by law and by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ or Quebec self-regulatory real estate brokerage organization).

Real estate brokers must also pass a training program and have a permit.

Before deciding to work with a broker, you can check the OACIQ website to see if he or she meets these requirements. You can also check to see if the broker has ever been disciplined for ethics violations. Finally, you can also ask to see the broker’s permit.

So, let’s say you list your home with a brokerage and get a contract on your home for $200,000. Since you agree to pay 6% of the purchase price in real estate fees (3% for your listing broker, and 3% for the broker who brings the buyer) you may think your agent is walking away with a nice check for $6,000 for their hard work.

In reality, the agents split the commissions with their broker. So, if the listing agent is working with a broker for an 80/20 split, the 3% you pay to the listing broker gets split in two. The buyer’s agent has a 70/30 split with their broker, and so the breakdown of the 6% total commission, or $12,000 in this case, the commissions would look something like this:

• $4,800 to the listing agent.
• $1,200 to the listing broker to keep.
• $1,800 to the buyer’s broker.
• $4,200 to the buyer’s agent.

Again, this is standard practice in the real estate industry. Commission splits enable brokers to pay for administrative services, supplies for agents such as keys and lockboxes, and yes, earn money for their work too.

Brokers may also earn commission on transactions they do for clients personally. So, in the example above, if the broker was a broker-owner and also the listing agent, they would get to keep all of their 3% commission on the $200,000 house. Brokers can also earn non-commission earnings, such as charging agents a monthly fee for admin services regardless of their sales.

Being a customer-centric professional, the most vital role of a broker is to build network and maintain a cordial relationship with the clients. Apart from this, they also handle other administrative operations such as preparing sales documents and keeping the clients abreast with the latest information and updates through regular follow-ups.

Understanding the difference between a broker, real estate agent, and realtors: All professionals working in the real estate domain have different roles to perform. The terms broker, real estate agent and realtor are often used interchangeably, but their qualifications make them distinct from one another.

To start with:

A qualified expert, i.e. real estate agent, is a licensed professional who participates in property transactions or purchase deals. They are also called real estate associates who bring buyer and seller to one platform for completing the transaction. Once the deal is closed, they are entitled to get 1-2 percent of the total transaction value as commission or brokerage. The percentage varies across States and from one agent to another.

Brokers, on the other hand, have a wider role to play in comparison to agents. They are technically sound, proficient and qualified in the property world. They can either work as independent agents or own a brokerage where they employ other real estate agents. They are also entitled to receive the commission once the sale materialises. The fee for a broker is usually mentioned in the broker and buyer/seller contract.

Realtors are largely licensed agents associated with industry bodies such as the National Association of Realtors or any other trade or realtors' association. Salespeople, appraisers, agents and brokers can all be realtors, given they associate themselves with a recognised organisation and follow the requisite code of ethics in their business practices.

Importance of licensing for real estate brokers

All real estate experts or agents working in different States are authorised to work as brokers. However, to be able to employ agents under their supervision, brokers need to achieve a higher level of certification or licensing. Amateur brokers lack basic knowledge about realty guidelines and procedures. Moreover, homebuyers also prefer to hire experienced brokers to get the desired results. As an intermediary between the buyer and the seller, a broker serves both the parties involved in the sale and purchase of a property. Thus, the roles and responsibilities of a broker go beyond helping buyers find a property.

Here are some responsibilities, which a broker must perform to serve their purpose in the real estate industry -

Analysing the client’s prerequisite: The most important characteristic of a broker is to understand the client’s requirement. Answering buyer queries in an accurate manner, suggesting the right locality, residential/commercial options available on sale and providing other legal assistance as per the requirement are some important responsibilities of the brokers. They must stay abreast with the latest market alterations and news and be able to address buyer enquiries effectively.

Addressing customer concerns: The real estate world works on the universal principle - ‘customer is king’. Thus, an integral role of a broker is to provide services to the customer with 100 percent satisfaction. Most of the brokers fail to survive in the realty business as they lack skills in maintaining relationships with the client. It is essential for a broker to do regular follow up with the client until their search is complete. If you are able to address the buyer’s concerns, then you are good to go.

Sites visits and coordination: After suggesting property options to the prospective buyers, a broker must also arrange site visits for the selected units. Ensuring hassle-free site visits and explaining the buyer about the location, the project, and the potential for investment based on existing and upcoming infrastructure projects are just a few roles that help a buyer make the right decision.

Sales offer and negotiation: Once the buyer has selected the property, it is the broker’s job to bring the buyer and the seller on the negotiation table and help them finalise the deal. Executing sales contracts is another critical job that brokers must fulfil. Their work starts from identifying the prospective seller and buyer and goes up to negotiating the offers and providing end-to-end guidance to the client until the deal is closed.

Documentation: After finalising the deal, the broker prepares and completes all the necessary documentation and paperwork for sale. Hence, for a broker, it is essential to have sound knowledge of State and Central laws, taxes, stamp duty and registration charges, and home loan procedure, among others. They have to ensure that clients are charged accurately. They must share all requisite information, receipts and statements with the clients in a timely manner.

According to YK Agrawal, Consultant, Spacindia.Com, “Customer-centricity, relationship building, needs assessment and conversion are the key responsibilities of a real estate broker or consultant. A broker must be transparent and share accurate information with the buyer w.r.t. to the project, the location and the property in question.”

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